2020 had been an unprecedented year for most of us. No one was ready to face the deadly COVID-19 pandemic, neither was prepared to deal with the consequences of it. Presumably, it had a deep and rather long-lasting impact on every walk of life. But especially, it revealed the inherent vulnerabilities of the global supply chains. The severe financial and operational consequences of the pandemic made it clear that not even global leaders in supply chain management were equipped to take on the challenges. True, the world is slowly getting back into its normal course. But the issues emerging from the disaster are yet to be addressed effectively.
Although the disruptive impacts of COVID-19 on the global supply chain are being extensively analyzed and addressed, global sourcing took another hit due to the Suez Canal crisis. Container lines and shipping companies were faced with additional challenges as sailing through the waterway has been reportedly suspended since last month. This would lead the supply chain managers to incur millions of dollars in extra transport costs that will presumably not be covered by insurance. Experts opine that the blockage will add to the negative impacts that global supply chains are already suffering due to the pandemic.
The lesson from both instances made it clear that the real task for sourcing agents is less about preventing disruption and more about fostering growth. To fully leverage the insights gathered from these crises, organizers need to opt for an aggressive strategy. Rather than playing it safe, they need to step out of their comfort zone and play more offensively. This will give supply chain leaders a relatively better chance of creating positive, sustainable outcomes. Here are some strategies that could be effective and beneficial for fortifying the global supply chain.
Adapt And Accelerate
In a world of fierce competition, survival is not enough to sustain companies in the long run. In a matter of crisis, survival instincts will only help the entity to endure and subsist. But this will not drive growth. To thrive, therefore, it is important to adapt. This is not only applicable to financial entities. Rather, it is a fundamental mandate of life.
The strategies to adapt as per unforeseen circumstances are built off of a growth-forward mindset. If you are trying to not just staying afloat but taking things to the next level, you must come out of your safety net. True, adaptation consists of some defensive approach, it is primarily derived from an aggressive, future-focused position. Instead of addressing the vulnerabilities of the operation, sourcing professionals should rather invest in fortifying their supply channels and look for ways to build strength.
Smart Sourcing
In these changing times, supply chain management has to aggressively make room for some change in attitudes as well. Coming out of the safety net, they are bound to make some proactive decisions. In the contemporary sourcing scenario, the incessant disruptions are forcing global sourcing leaders to take a shift from the conventional “source anywhere” approach. Rather, agencies are leaning more towards sourcing smartly and ethically. This implies that local sourcing is gradually becoming an important factor in effective growth strategies. Since the world has become so interconnected, organizations ought to think globally. Yet, local sourcing is fast becoming the most rewarding and successful growth strategy in terms of risk management.
Despite the benefits of domestic sourcing (both primary and secondary), there are instances where global sourcing is the only feasible and sensible solution. In such cases, conducting business with a single partner having several organization-owned operations across multiple continents appears more advantageous. First of all, it is a smart risk management strategy that ensures your resources are not dependent on a single source. Secondly, a single-source partner has higher levels of transparency, coordination, and oversight embedded into its business model. Finally, it is much easier to effectively communicate, collaborate, as well as innovate together when you work with the same partner throughout the process.
Design For Diversifying
Given the unprecedented collapse of global sourcing channels, the importance of building a diverse sourcing network has been substantially established. However, the strategy to design such a diverse network is still under meticulous analysis and implementation. It is also interesting, at the same time, to notice that the concept of sourcing networks is gradually taking over the conventional idea of supply chains. The former reinforces the idea that how supply chains are not as linear and simple as they appear. It is rather a complex web of interconnected structures and relationships. Therefore, instead of securing the supply channels, it is wiser to invest in cultivating relationships with your suppliers and design a more diverse network, leveraging on their specific strengths.
Rework And Reposition
As the world is recovering from the aftermath of the global pandemic, business is likely to endure a longer period of inflation. This makes managing pricing an imminent challenge. Therefore, organizations will have to work hard to redesign their pricing strategies and relocate value propositions. This would require an aggressive approach to go out of the conventional practices and familiar policies. However, this is necessary for customer retention and to expand the customer base. Preparing for the imminent changes in the industry is also essential to capitalize on the upcoming growth opportunities that will eventually accompany the changing market practices.
Trust The Technology
As per experts’ opinions on the future risk management practices, it is fairly clear that digital tools are becoming the future of supply chain management. To sustain and thrive further, businesses need to embrace technological change and leverage the benefits of it. The fundamental idea is that organizations need to integrate digital tools to drive both bottom-line and top-line growth. Artificial intelligence, predictive analysis, and machine learning will not just mitigate supply chain disruptions, it will also unlock lucrative opportunities in the future. To harness the power of this digital transformation, however, organizations need to be brave enough to evolve from their traditional methods and practices.
While the world continues to recover from the COVID-19 aftermath, it is clear that this is not the last attack on the global sourcing channels. So, we need to learn from the crises and translate those lessons into actions as soon as possible. This, however, is not possible as long as we play it safe. So, it is time to go big or go home.